Fixed income is still a mystery to many investors “Here's a rundown of those who answered "I do not understand it at all" with regard to the following types of bonds: Treasuries, 39%; municipal bonds, 45%; high-yield bonds, 46%; corporate bonds, 51%; structured products, 53%; Treasury Inflation Protected Securities, 63%. Of the 849 respondents who don't own fixed income or don't have any investment portfolio, 44% said they don't buy bonds because they don't understand the different types of securities.”
I’m a bit unsure of just who comprised the sample group. Assuming it was a random cross-section of the adult population, I’m not surprised at the results. First, many can’t afford to pay the rent - let alone invest. But a good many who own solid mutual funds, perhaps on the advice of a friend, advisor or employer, might not understand the intricacies of the bond market. So much depends on your life experience and amount of time you’ve spent reading or talking about a subject.
I suppose I could conduct a survey of some common fishing terms like: “down-rigger”, “high-lining”, “slip-sinker” or “cow-bells” and get a similar low percentage of respondents who knew what they were. But, if you grew up in a Great Lakes costal town and fished a little or knew people who did those are all very common and well understood terms.
From another perspective, I really don’t understand the bond markets. When folks are willing to invest in bonds yielding only 1 or 2 percent - or even in some cases, in bonds that are guaranteed to pay you back less than you invested .... it really does escape my feeble understanding.
M*: Investing Close To Home Is Overrated Nothing of the kind but I think that you make much ado about little. On the funds homepage they say they seek companies with headquarters in the midwest. However since you singled out Minnesota they have this to say about the state:
"Minnesota: An Opportunity Rich Lands
cape for Investors
Successful investing requires discipline, patience and a singular focus on what matters. Our success over more than eight decades has been built
on delivering superior long-term investment performance for our clients. While solid investment opportunities can be found in many places
beyond the borders of Minnesota and the Upper Midwest, our firm’s second president, George Mairs III, recognized that he was surrounded by an abundance of opportunities close at hand. Taking advantage of that fortunate circumstance, investing in what we know, has enabled Mairs & Power and our clients to grow and prosper. We believe that by looking for investment opportunities close at hand, we will continue the Mairs & Power legacy of investment success far into the future."
White Paper
The Closing Bell: Stocks Waver On China Data Re: “ Stocks Waver On China Data”
Does somebody get paid to cook up these silly headlines every day? Yesterday it was BREXIT. The day before that it might have been the lunar cycle. I don’t know. Of course, only a third grader would believe that a single factor “moves” the markets each day, or for that matter, that there’s been any significant movement at all for a long time.
Truth is the markets have been incredibly stable for a long time now - save perhaps for some nations like China that are hurting from the tariffs. So pretty much nothing happened of consequence in the financial markets today ... or yesterday ... or the day before that. Trying to pretend something important happened borders on insanity.
My headline: “Markets have gone nowhere for most of the year.”
- U.S. stock indexes are near where they sat more than a year ago, mid-way thru 2018. For the most part, they’ve retrenched / recovered from the nasty selloff of late 2018.
- Gold was hot for the first 5-6 months of the year, tacking on $100-$200 and getting up above $1500. But it has in recent weeks slumped back below the $1500 level.
- Oil has stagnated (fitting I guess for a product derived from dead dinosaurs). Brent and NYMEX have been hugging the line just below $60 for several months now - far below their all time highs of several years earlier.
- Interest rates fell sharply for a month or so to absurdly low levels. They’ve retrenched those sharp declines in recent weeks but remain abnormally low.
- Jerome Powell is breathing easier nowadays as the scapegoating of him seems to have abated. DT’s attention and wrath have been diverted away from Chairman Powell’s backside to some - uhmm - other pressing issues.
Lipper: Investors Flee Emerging Markets Funds During The Third Quarter @BenWP Hah! Actually I had taken my equity position down to 50% a month ago so had been feeling smart until this week. But who knows what the hell the market will do. I just have confidence that the big idiot will screw things up. Thanks for sharing
CAPE.
Lipper: Investors Flee Emerging Markets Funds During The Third Quarter Just a new short-term position in CAPE Initiated in early August. I have owned it before. The last couple of up days have pushed it squarely into the green, but it’s been a rough ride. I may have explained elsewhere that I don’t trade DSENX, but treat it as a core holding. Therefore, no change in my positions in that fund in three different accounts. As you know, we all feel like geniuses when the market goes up!
Crashes coming?! to god's ear
do you think warren-buttigieg can win? that does not sound so promising to me. young midwest mayor ...
it cannot be two women. did you read jcapehart's wapo family reunion piece (in SC, I think, maybe NC? I think everyone is AA, like him; many said no to black candidate, country not ready, and elders --- women --- said no woman, either, 'we tried that and look what happened' ... hence biden's reassuringness).
New to MFO & building a Defensive Equity Portfolio... @GREGTIf you come to think that a fund which automatically sells and value-buys within the SP500 world every month might be sort-of defensive (not like low-vol funds and ETFs, though), you will want to take a look at DSENX/DSEEX and the etn they are based on,
CAPE. There is much deep diving on them within this forum.
How Does A 6% Yield wWith a Tax Break Sound? Try Preferred Stocks! This is the latest example of a poor article from a Forbes 'contributor'. Specifically, very poor timing. Where was this guy in late December? Probably busy selling all his preferreds. It is articles like this one with its incredibly poor timing that effectively provides newbies for existing pfd holders to distribute their preferreds.
Most quality preferred are now trading well above their call/par value, having rocketed in price in reaction to declining yields. Yes, you can clip coupons until a call date arrives, but if rates stay low, those preferreds WILL be called away from you at par. The call price will act like an irresistible magnet as the call date approaches, inevitably pulling down prices.
Investing in collective vehicles of preferreds (i.e. ETFs, OEFs, CEFs) doesn't escape this simple arithmetic reality. All (most) preferreds held in those vehicles are similarly trading at steep premiums to their call prices.
OTOH, if (when) rates rise, pfds will fall harder than fixed-duration debt instruments.
I don't pretend to know where rates are headed. But investor sentiment is overwhelmingly bearish on rates. That bearishness has certainly been reflected in the price you will pay for any preferred offering today...
How big must your nest egg be?
Vanguard Dividend Growth Reopens. Enter at Will. I own both DSENX and
CAPE, but I use them differently. The MF is a buy-and-hold in both taxable and Roth accounts our family has. As
@davidmoran has pointed out elsewhere, the monthly MF distributions serve to buy more shares regardless of the market's level.
CAPE, the ETN, I use as a short to medium term position. My current position represents three buys during the last two weeks' volatility. I don't know how long I might keep this position.
Vanguard Dividend Growth Reopens. Enter at Will. Thanks
@BenWP. What are your current thoughts on
CAPE?
M*: The End Of Favorable Tax Treatment For Inherited IRAs? I was one of the grandfathered age groups,
@Catch, here in MI, so es
caped the effect of the original legislation. I’m still proud to have been union, but my state is certainly no longer pro-worker. Indiana eliminated collective bargaining for public employees by gubernatorial fiat; Wisconsin went to the dogs funded by Ménard money, and we are also a “right to freeload” state. Hard to fathom, at times.
DLEUX as a replacement for VXUS? I never got into DLEUX, but I am a fan of DSENX and CAPE. It's hard to make a case for international stocks. CAPE has gained 96% over the past five years while VXUS has lost 1.27%. The highly touted FMIJX has a yearly return of about 5% for the same time period. I own some SMID global/international and some MIOPX, but the days when I owned a big chunk of international either in my TIAA retirement account or my actively managed portfolio are long gone. Foreign under performance is quite long standing as typified by the demise of Harbor International, a former kingpin. On the other hand, I am a fan of global funds (MGGPX, ADPFX, ARTRX).
DSENX FUND The reason to write about it now, responding to the OP, is that for almost 6y it has consistently behaved differently from (similar to but better than) SP500 vehicles, ditto for CAPE, and also differently from actively managed (stockpicker) LV funds.
Presumably, weasel word, if past is any guideline. in a bear market it will do similarly.
In other words, when you graph ($10k growth) of it vs CAPE and VFINX for the six months from last Sept 20 to last March 20, it tracks that sharp decline exactly but slightly worse, meaning the Christmas low point is down almost $2k to $8k (20 bucks short), whereas the CAPE loss was slightly less and VFINX went to $8124 only, not quite as bad.
Then for the comeback it lagged slightly until February, and by March 20 both DSEEX and CAPE pull ahead of VFINX, a little, with DSEEX slightly ahead of CAPE.
Breakeven for all back to $10k was around April 4.
DSENX FUND DSEEX up 2.9% above SP500 the first half of this year, in a crazy-strong period thus far (over 18.5%);
1.6% above CAPE alone;
and even a percent or so above TRBCX and FCNTX.
A hair under FLVCX, of all things, which is otherwise not good at all, and even a hair over QQQ.
So again wow, so far.
DSENX FUND Interesting link,
@davidmoran, to 2013 MFO commentary. The link to Sam Lee's M* article on
CAPE is worthwhile, particularly where he says he'd prefer more history than just back to 2002. He was also very prescient in saying he'd feel more comfortable if
CAPE were shown to work in overseas markets. As members have said here, DEULX has not really shown much until this year.
My re-reading also reminded me that the Oakseed Boys were announced with some fanfare in that issue of MFO and RPHYX appeared to be a world-beater. History was not kind to SEEDX (liquidated in 2017) and RPHYX tested shareholders' patience when Mr. Sherman seemed to stumble in trying to explain a period of severe under performance. I previously in this thread noted (obliquely) that Ryan Caldwell's Chiron Capital Allocation (CCAPX) fund benefited from a nice write up in MFO and then promptly showed it couldn't keep up with its M* bogey. The success of
CAPE really stands out against a backdrop of a several failed efforts to invent a new mousetrap.
